NAFTA talks concern dairy farmers

Providing American dairy farmers with more access to the Canadian market could be “incredibly damaging” to Canadian dairy farmers, according to Timiskaming-Cochrane MPP John Vanthof.

Vanthof, a dairy farmer himself for more than 30 years, said Thursday trade talks between Canada and the United States are “obviously very concerning.

“I’ve gotten a lot of calls from dairy farmers” who fear for their future as United States trade negotiators press for greater access to the Canadian market.

Vanthof says the supply management system in Canada “has worked well over the last 50 years, and that’s the reason it is being targeted.”

Canadian dairy producers – as well as other agricultural sectors – operate under a supply management system which allows certain sectors to limit the supply of their products to what Canadians are expected to consume to ensure predictable, stable prices.

Canada’s supply management system, according to Dairy Farmers of Canada, provides “balance” by enabling Canadian farmers to act collectively to negotiate price and adjust milk production to meet consumer demand.

“It works,” Vanthof says.

A major cause of the problems in the American dairy system, he says, is that there is no check on the amount individual operations are able to produce, resulting in surpluses that have to be exported or destroyed.

“They have a huge surplus problem,” Canadian Federation of Agriculture president Ron Bonnett says. “A real look at their own system has to take place in the U.S. “They recognize that you can’t keep putting out milk and putting out milk and hope it’s just going to be resolved.”

Vanthof agrees.

“The president (U.S. President Donald Trump) is trying to blame the problems (with the U.S. agricultural sector) on Canada. They have huge overproduction. It’s a real problem.”

The U.S. argues that tariffs of up to 300 per cent on dairy products shipped into Canada are blocking sales.

In 2016, U.S. dairy producers shipped $600 million worth of goods duty free to Canada – about five times more than Canadian farmers sold in the U.S.

“There is a certain amount of trade that does take place,” Bonnett says. “Even if they did pull open access to Canadian markets, that’s not going to solve their problem.” There appears to be a “disconnect” between Washington and the country’s dairy farmers when it come so oversupply, he adds. Vanthof is also concerned about the possible effects on operations such as the Thornloe Cheese Factory near Temiskaming Shores. If a trade deal is reached that allows greater import of “fine cheeses, it could displace” that kind of operation, Vanthof says.

“It could hurt small processors more than it does the farmers,” Vanthof says. “Farmers are able to pool their resources and their profits,” but that same safeguard is not in place for operations such as cheese manufacturers.

Canada and the U.S. are trying to finalize a text that could be submitted to Congress by the end of the month to join the deal the Trump administration signed with Mexico.

Also unresolved are protections to Canada’s cultural sector and the Chapter 19 dispute resolution mechanism. Trump, who has threatened to move ahead on a deal without Canada, also seeks a political win ahead of November’s midterm elections where members of Congress in border states look to retain their seats and pacify businesses whose biggest export customer is Canada. The hope is for a trilateral agreement in principle that Congress can approve before Mexico’s new president takes office Dec. 1. David Wiens, vice-president of the Dairy Farmers of Canada, says his industry has given enough in previous trade deals and will not tolerate more concessions.

“We’ve taken those hits for team Canada, and we are determined that there be no further concessions on dairy,” Wiens says. “We have hit a wall on this where enough is enough.”

Wiens declined to say what action the organization would take if an updated NAFTA deal gave the U.S. a greater chunk of the Canadian market, but did not rule out campaigning against ratification of the agreement or the Liberal government.

Dairy farmers are considered a potent political force in Quebec and Ontario, the two provinces where the industry is strongest, and two key battlegrounds in next year’s federal election.

Wiens says concessions made in Canada’s CP-TPP free-trade deal with Pacific nations and the CETA agreement with Europe have already forced his members to give up an extra five per cent of the market – a $250-million loss.